Barely noticed by the Bush administration, evidence is mounting that large-scale development of wind energy is becoming much more feasible and economical. Once dismissed as the darling fringe technology of environmentalists, wind is becoming a commercially viable, middle-of-the-road power source that could be a significant building block of the nation's energy supply. In the hurly-burly of the current energy situation and the uncertainties of deregulation, no contribution should be overlooked. But wind energy needs and deserves federal support.
TAX CREDIT. At the very least, the White House should support the extension of the wind-energy production tax credit, scheduled to expire at the end of this year. The credit reduces taxes on wind-energy revenues by 1.7¢ per kwh for the first 10 years of a windmill's operations.
The administration should support extending that credit for five or 10 more years. Making that long-term commitment would end the current boom-and-bust cycle of wind-energy development, with developers scrambling to take advantage of short-term extensions of the tax credit, which was set to expire two years ago until extended.
Want evidence of the feasibility of wind power? Earlier this year in the Pacific Northwest, 25 developers responded to a request for proposals by the quasi-federal Bonneville Power Administration, which asked for 1,000 Mw of new power from wind. Instead, developers proposed supplying a total of 2,600 Mw, enough for 500,000 to 750,000 homes. The response "blew us away," one BPA official says.
Currently, wind energy generates just 2,600 Mw, or less than 1% of the nation's electricity. By 2020, it could meet 6% of the nation's electricity needs, according to the American Wind Energy Association (AWEA). Indeed, the Clinton administration announced a plan in 1999 for wind energy to provide at least 5% of U.S. electricity by 2020.
At a 6% level, wind energy would provide the same output as 70 conventional powerplants. Although limited in comparison to the 1,300 new powerplants that the Bush administration calls for, that 70-powerplant equivalent could make the difference between having adequate supplies and occasional power failures.
Already, several states are starting to exploit the potential of wind energy. Two years ago, the president's home state of Texas mandated the generation of an additional 2,000 Mw from renewable sources including geothermal, biomass and wind by 2009. This year, an estimated 13% of Texas' new generation capacity will come from wind farms. Other states are offering various tax breaks and other incentives as well. New York expects renewable sources to supply 20% of the electricity used by state-owned facilities by 2010.
We need similar policies on a federal level, targeted to the development of utility-scale wind farms. The Bush administration should follow Texas' lead by instituting a federal renewables portfolio standard, requiring that a certain percentage of electricity generated in the U.S. come from renewable sources. AWEA suggests and I agree that 10% from renewables by 2020 is achievable. By comparison, the European Union has committed to generating more than 20% of its power from renewable sources by 2010.
The experience of countries such as Denmarkwhich currently produces more than 13% of its electricity from wind, with a goal of 50% by 2020indicates that power developers would invest in the U.S. if there were assurances that production incentives and tax credits would be available long-term.
The current exercise in creating a national energy policy offers the Bush administration an opportunity to make such a commitment. After all, the federal government already subsidizes other kinds of energy development. The oil and gas sectors are among the lowest-taxed of any of our industries, and nuclear power was heavily subsidized in its early development. Why isn't wind energy, which by any measure is more environmentally benign and could contribute to U.S. energy independence, also worthy of such government largess?
COMPETITIVE. Wind energy doesn't need a lot of government help to be successful. In fact, wind energy is being produced already for as little as 4 to 5¢ per kwh. By comparison, electricity from coal is costing 3 to 4¢ per kwh; 5 to 6¢ per kwh from oil; and 3 to 5¢ per kwh from natural gas (although last winter in California, prices skyrocketed to 15 to 20¢ per kwh for power from fossil fuels).
Modest incentives and tax credits could make wind farms much more viable in California, Texas, the Pacific Northwest and many Midwest states. Wind energy will not eliminate the need for new fossil-fueled powerplants or conservation. But if the administration truly wants a comprehensive and long-term solution to the current energy situation, it should recognize that part of the answer is blowin' in the wind.